Whether you’re an employer or an employee, you need a proper understanding of how wages work. How you earn your income affects your lifestyle and how you would manage your expenses, savings, and budget. You can get employed on a full-time basis or part-time. Sometimes, it can be contract or project-based.
Understanding the difference between salary vs. hourly pay is important and influences whether you apply for a job or promotion. If you’re currently job hunting or looking into making a career change, then this article is for you.
I will help you understand everything you need to know about salaries and hourly wages, so let’s get started with…
What’s The Difference Between A Salary And Hourly Pay?
The difference between the two is quite straightforward. A salary is a fixed payment that’s usually based on an annual figure. Hourly pay is based on a rate that’s been agreed on between concerned parties. With an hourly pay job, the amount you make is based on how many hours you work.
In a professional setting, contracts are provided, whether it’s a salary or an hourly paying job. Even though there’s a distinct difference between these two, both have pros and cons.
Pay For Salary Employees
Salaried employees are paid a regular and consistent amount based on their contract agreement. As an employee, you typically get set work hours, which means that some companies may not pay you for overtime.
If you’re a salaried employee, you must receive at least $455 per week. Your minimum monthly salary would be $1,820 without benefits. Keep in mind that this is just the base salary, and you could earn more based on your profession. Positions for these employees include being marketing professionals, engineers, and accountants.
Pay For Hourly Employees
If you are paid by the hour, you can receive your income weekly, biweekly, or even monthly. As an hourly employee, you are considered to be non-exempt under the FLSA. This means that you’re entitled to overtime if you work more than 40 hours per week.
The FLSA requires that non-exempt employees receive the minimum wage, which is $7.25. The good news is that some states and cities have set higher minimum wage rates than the federal ones.
Salary vs. Hourly Pay – The Pros And Cons
As with all things, there are pros and cons which you must understand before making any decision. This will also help you to estimate your income and whether you’re best suited to being a salaried or hourly employee.
There are more company-provided benefits, and these are more substantial than the ones received when earning hourly pay. Salaried jobs have benefits such as health insurance and parental leave. Employers also offer 401(k) plans.
You can take sick leave when necessary, and you’ll be compensated unless your work policy or contract does not allow it. This is unlikely, though, as most contracts state that salaried employees get a certain number of sick leave days.
Do You Need Stability?
Office titles and responsibilities are well defined, which comes in handy if you plan on moving up the career ladder. Roles are well outlined, and as an employee, you can develop the necessary skills attached to your job.
If you’re adamant about stability, then a salaried job is for you! Some people feel stable when they’re guaranteed how much they should expect every month.
Many salaried employees are exempted from receiving overtime pay as outlined by the Fair Labor Standards Act (FLSA) unless their contract states otherwise. In other words, any extra work you do will not come with extra pay.
If you’re keen on being organized at work and keeping track of time, add this Betus foldable compact desk clock to your office. It’s easy to operate and displays the daily temperature.
Here’s something interesting. You can sometimes earn more as an hourly employee than you would in a salaried job. This is possible if you take on certain projects or you work a lot of overtime. Being compensated for every single hour you make will give you a good salary.
There’s a good chance that as an hourly employee, you are not supervised by anyone. Your employer is more concerned with seeing the ultimate results of your service. This gives you the freedom to manage your time better, and you can take on as many projects as you can handle.
An hourly employee has no guarantee of how many hours they will work each week unless they have a signed contract. Even then, it’s not fully guaranteed as work hours may vary based on the tasks given. You might work more hours some weeks and less on some. This will affect the amount you earn, whether it’s per week, biweekly, or monthly.
You won’t get insurance or a 401(k) plan. You might not get to enjoy holidays because your shift schedule depends on the projects you are handling. In other words, you could find yourself working on the Fourth of July.
You don’t get sick leave…
If you end up ill, you’ll not be compensated for time missed at work. As an hourly employee, you don’t get official sick days. So, if this is your line of work, stay healthy by taking Layers Daily Glow Probiotics Supplements. They are clinically effective and gluten-free, and they help keep your body healthy and working well.
How To Calculate Your Paycheck
You should know how to calculate your paycheck whether you’re a salaried or hourly employee. Use a paycheck calculator to break down the amount because it helps you work out how much will go to taxes and FICA.
FICA stands for Federal Insurance, and the deduction which is made by FICA goes towards your Social Security and Medicare. This calculator gives you a realistic calculation of how much of your income you take home.
More On Working Hours And Salaries
Still, deciding on what kind of hours you want to work? Then, check out the difference between Part Time And Full Time Hours, as well as my 20 Part Time Jobs That Pay More Than 20 Per Hour and 15 Part Time Jobs That Pay More Than 40 Per Hour, to see what options you have to choose from.
Congrats on the new job! Now you’ll want to know a few things such as How To Answer Desired Salary, and What Are Your Salary Expectations, as well as How Do I Convert Salary To Hourly To Calculate A Part Time Rate, and How To Counteroffer Your Salary After A Job Offer in 2022.
Furthermore, why not take a look at my Best Jobs For College Students, or maybe even Flexible Jobs That Let You Set Your Own Hours if you’re working from home, along with my Top Easy Jobs That Pay Well.
Salary vs. Hourly Pay – Final Thoughts
Comparing salary vs hourly pay will help you make a concise decision for your career.
Some prefer being hourly employees because they get the freedom to manage their time. Both salaried and hourly jobs have their benefits and disadvantages. If you prefer having a set budget because of your responsibilities, then being a salaried employee would suit you.
On the other hand, hourly employees sometimes earn more and can take on as many projects as they can.
Take time to compare the two before making your next career move. While there are distinct differences between the two, one is not necessarily better than the other. You’ll be surprised by what suits you and the positive impact it will have on your future.
All the very best with your new job hunt!